House downvalued by 50k - advice?

[DrPaw]

I’ve done a search and there seem to be a lot of threads about downvaluing recently so I guess it is quite common. We have been looking since February and had several offers rejected but finally had one accepted. Now, the bank has downvalued it by £50k. Asking was £625k, we got it for a bit less.

I was going to email the Estate Agent to let them know and ask them to inform the vendors we may need to revise our offer and see what they say.

However, the bank’s valuation was a desktop valuation. We are paying for our own independent survey (Homebuyers) which is due to take place in a couple of weeks. Should we wait until we’ve had this before saying anything?

Would the bank use the info from the independent survey to revise their valuation? The mortgage advisor did seem a bit surprised that we were getting our own survey done rather than doing it through them, would it have been better to do it through the bank so they would have actually had to visit the property?

If we renegotiate now and then the survey says the house needs a new roof or something, we’d have to renegotiate again. However, I wouldn’t want to bother paying for the survey if the vendors won’t budge.

We have a decent deposit so could absorb some of it but I’m not paying 50k over value, it significantly increases our LTV and would potentially make remortgaging in a few years painful, especially if values crash as some are expecting.

Any advice would be welcome!

@Fifiver Can totally understand that. The market does seem to have changed again in the last few weeks. Even fewer houses coming to market and seeing some reduced too. We can easily afford our current house, even with rising costs etc so maybe we should just stay put and ride out the impending storm. Would be gutted if in a few years we felt like we’d missed the boat though.

I also agree that the desktop valuation is the issue for a number of reasons- the person doing it doesn’t see the house so can’t take account of differences in properties on the sand street (one might have a much longer garden, better parking or a fantastic kitchen and decor- or indeed all 3!). Also they can only look at sold houses on the same street and then the accuracy will depend on how many houses have sold recently- if there have been very few sales of similar houses in the last 6 months they won’t realise that the market has moved. Plus banks are being super cautious at the moment. You can try to renegotiate but if it’s a good house in a desirable area they may not do so based just on a desktop valuation.

I also agree that the desktop valuation is the issue for a number of reasons- the person doing it doesn’t see the house so can’t take account of differences in properties on the sand street (one might have a much longer garden, better parking or a fantastic kitchen and decor- or indeed all 3!). Also they can only look at sold houses on the same street and then the accuracy will depend on how many houses have sold recently- if there have been very few sales of similar houses in the last 6 months they won’t realise that the market has moved. Plus banks are being super cautious at the moment. You can try to renegotiate but if it’s a good house in a desirable area they may not do so based just on a desktop valuation.

Yes, I agree it's a shame and clearly not ideal but it would be much less ideal to potentially lose £100K very rapidly if the market falls as is expected by many.
See what the sellers say and take it from there depending on how much you love this particular house, area, etc

@Heronwatcher I get the feeling they’re not going to renegotiate. And possibly that they’re maybe not 100% committed to moving. I think we’ll see what the survey says, if close to bank’s valuation we’ll try to negotiate with vendors, if closer to our offer we’ll try to negotiate with bank or look for an alternative lender. But feels very much like it won’t happen now 😕

@DrPaw it will really depend on their situation I guess but I think that what I am saying is that in my view it’s not inherently unreasonable for them not to negotiate based on a desktop for the reasons on this thread. Now if your survey finds something majorly out of line that would be a different matter. Or even a few dodgy things combined might mean that they could be prepared to meet you half way or make a goodwill gesture. You could also speak to the mortgage broker to see if they can recommend a different lender and/ or the estate agent- they will probably know which lenders are less likely to come back with very conservative valuations.

I know what you mean we have a lot of equity and this house is cheap we feel very protected. I've let the dream go of moving for a while we have til 2024 for DD to go to secondary. So we will see where we are at then.

Mine was downvalued by £30k; we met in the middle. It didn't affect my LTV and the bank were still happy to lend me the full mortgage amount because I have a decent deposit.

I'm sticking with it because I'm currently in rented and will save approx £200/month paying the mortgage rather than rent. I am probably overpaying but the market locally is still crazy so I'm rolling with it.

@dubyalass that’s very interesting, was yours also a desktop valuation? We spoke to a financial advisor to get a second opinion. He said that because the bank is willing to go forward and lend us the amount anyway, he would recommend we go ahead. He said that in 5 years when we come to remortgage they will look at the land registry data etc, and original bank valuation won’t have an influence (and if it did, he said just go with a different lender at that stage). I think this is what someone upthread was also saying.

The risk is really if the house value were to take a dive and not recover over the five years I suppose. Because we have a decent deposit even if the house value dropped by 20% over the 5 years we’d still be in the same LTV band when it comes to remortgaging.

Other risk is obviously if for whatever reason we had to sell much sooner than that it’s more likely the original valuation would have an influence.

We’ll see what survey says first anyway!

The bank's surveyor visited the property in my case, but there were very few comparables. I knew I was probably overpaying slightly but this is a long term home.

My own independent surveyor (based in the same town) valued it at the original offer price. I keep an eye on asking prices locally and they're still rising, including in the less favoured areas. The location is ideal for me, it's in liveable and not too dated condition, there are ways to add value and it should be relatively cheap to run. Plus it's got parking and a garage, which are at a premium here.

Hopefully valuing more sensibly will pick up steam in the coming weeks and months.